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Wednesday, November 30, 2011

We Could Get Out of Recession in Days if the Politicians Wanted - 24 Point Programme

   Yesterday's mini-budget says that we aren't going to get rid of the deficit in this Parliament; that we are flatlining rather than growing; that the disastrous ever growing deficit the Conservatives, correctly, predicted Labour would produce has been produced by them; and that their current predictions are based on the improbable assumption that the slow motion collapse of the Euro will stop, otherwise things will get worse than even the OECD's prediction of deepening recession. John Redwood today points out that far from cutting anything the government has actually increased the state sector by 1/2% of GNP and reduced the private one, on which all hopes for growth have been publicly laid, by the same.

   None of this is inevitable. It is perfectly possible to get out of recession within days and all the political leaders know it. I first pointed out how in 2008 in 11 points (and sent it to all the parties, none of whom disputed it would work or indeed noticed it in any other way|) and expanded it to 16 later that year with the same effect. In 2010, following Cameron's promise of a "relentless forensic focus on growth" I sent an updated list of 23 things that would work and a subsequent FoI proved that they had relentlessly refused to give the slightest "forensic" consideration to such growth whatsoever.

   In conclusion there is no dispute whatsoever by any elected politician that these would work and that if even a few of them were done we would be out of recession very quickly. Nor is there the slightest intention to do so. I initially assumed that each one, at least of the 1st 16, would increase growth by at least 2%, based on the Irish experience of cutting corporation tax and building regulations. If all 24 (I have added a new one at the end) were done I'm not sure we would achieve 48% annual growth but it would certainly be world beating.

   Here they are again. I will, again, send them to all the parties and various individual politicians and think tanks and will be happy to publish any responses, including criticisms, any of them feel able to make. If they can't dispute, in any way, that they would work we must assume they agree they would. That implies that all those who have the power to promote this and don't simply and deliberately do not want us out of recession because hard times for us help them "to keep the populace alarmed (and hence clamorous to be led to safety". (Mencken)

1 - Cut the size of government spending - I would go for a no new hires rule & price freeze in the government, probably excluding new doctors & a few other proven front line requirements - this should be about a 5% real reduction year on year. Also completely prune particular departments described later. 5% of the budget is £30 billion so including both actions over a couple of years that is probably about £100 billion. Mark Wadsworth comes up with a similar figure from different directions. This doesn't itself increase the economy, indeed cutting the non-productive £100 billion would cut the economy by £100 billion (ie 7%) but gives us money which can be used with a real multiplier effect & long term growth benefits.

2 - Cut corporation tax to Irish levels - cost about £30 billion & this is the main bit of what got Ireland's growth up from 2% to 7%.

3 - Lets go overboard & cut business rates too - about £20 billion at half the effect.

4 - Gut the Health & Safety Exec - if it saves the work of 4 million workers that is 14% of the economy.

5 - Allow the free market to build as many nuclear plants as the market needs, starting tomorrow. There are arguments for & against the government paying for & owning it but lets keep it simple & at zero cost.

6 - Improve transport - better roads, particularly motorway junctions, allowing airports to expand & the road tunnels project. Cost a few billion. Improving transport infrastructure is one of the things where government expenditure actually works.

7 - Adult job training. Hire retiring plumbers, electricians etc etc to do evening classes in some of the schools empty in the evenings. Adult, particularly male, technical education is the part of education which shows real worthwhile payoff in productivity.

8 - Automate the rail system & introduce lightweight vehicles based on road vehicle technology. My guess is this would be about £10 billion annually but once it is done rail costs go way down & capacity way up.

9 - Quit the EU. The Bruges Group have said the EU costs us £55 billion in direct costs. The EU's Enterprise Commissioner says the regulations alone cost £405 billion - ie £67 billion to us.

10 - Allow almost unrestricted housebuilding & encourage modular methods. This should let them cost about 1/4 the present price. Housebuilding is pretty much the biggest industry in any country & that would give us an enormous boost.

11 - End most of the sort of "environmental" regulations which have stopped Trump investing his £1 billion here for 3 years. This alone has cost the Exchequer £360 billion (£12% a year).

12 - This has already been done, albeit accidentally & need not be extended - Letting the £ drop is a major stimulus to the productive sector though exports. It worked in Major's time too - also accidentally.

13 - An X-Prize foundation & a free market regime on Ascension Island as a British Space base. So long as the Foundation is guaranteed an increasing amount of money at approx 5% above the rate of growth & able to offer prizes based on what the fund will be in future it can offer multiples of the current cost & in turn the gain to the economy will be multiples of that figure. Of course if nobody wins such prizes it has zero cost - that being the worst case scenario. I would suggest £1 billion a year as starting payment which would certainly put us at the top of the space & high technology trees attracting many times that level of investment & even more importantly, many of the world's best brains.

14 - I see that though we have saved £155 billion plus we have only spent about £70 billion. Put the rest into cutting taxes (28p off income tax or equivalent!). I would also support raising alcohol taxes since it discourages something socially damaging whereas most tax discourages productive stuff. It wouldn't take many years of excise duty rising faster than a Chinese style growth rate to pay for all the size of government here.

- These are 2 a bit of a flyer not to be done till we know the economy is recovering:

15 - Build some floating islands, probably around Ascension island, probably about £1 billion each.

16 - Make a purchase guarantee for a factory to mass produce turnkey operation nuclear reactors in Britain, for use here & around the world. If it can be done with a new design & much smaller & hence less economic reactors it can be done for normal 1 gw ones. Invite the best designer, probably Ariva or Westinghouse (which used to be British owned but the government forced British nuclear to sell it off). We guarantee that if they can make a production line turning out one, turnkey operation reactor, a day we will purchase the first 2 years supply at cost if they can't sell them abroad. Assuming £350 million (70% of the current minimum price) a shot that puts us on line for a £255 billion liability & I am working on the assumption that, since there is currently a backlog they would actually sell. That is a bet but a reasonable one & if it works we would lead ourselves & the rest of the world to unequalled prosperity & end up with the sort of role in building the world's electrical power that the US has exercised for decades in world aircraft production.

17 - Government should recognise that, vital though the free market is, a strategy of promoting technology is at least equally so. Strategy of Technology by Possony, Pournelle & Kane should be required reading for anybody involved, as it has been for US officers for many years. It is about the need for society to promote technological goals to achieve military supremacy, as indeed they did when the USSR found it could not match the technology of the SDI programme. The authors had been decisive in promoting SDI. However the same principles apply equally, if not moreso, in the economic field where our most aggressive competitors are China & India & our only major advantage is technology.

18 - Beyond an official technology prizes foundation (#12) mainly orientated on space technology, the government should give extensive tax relief for any privately funded technology prizes. Prizes mean that though government can choose to have winners, simply by putting up enough prizes, they don't have to try to pick the winners in advance as grant funding does. Private prizes have the additional benefit that people thinking outside the traditional government "box" can come up with ideas & promote them. This is less important for space development where the technological challenges are mainly engineering & the problems well understood. By comparison pure science prizes, like the M-Prize whose importance to aging research cannot easily be underestimated, has achieved repeated successes with funding which government would consider insufficient to carry as pocket change.

19 - Adopt as an aim that 2% of our GNP should be available for these private & public X-Prizes. Most of this could come from a reduction in grants, it would certainly lead to a far more than 2% increase in GNP (probably much more than a 2% increase in the annual rate of GNP growth) & would do far more for British status worldwide & long term security than the 3% of GNP spent on the military. The evidence is that prizes are 30-100 times as cost effective as the normal government grants & advance payments. If they don't produce results obviously no prize is awarded so that is infinitely more cost effective :-)

20 - Stop subsidising windmillery. One major driver of successful economics is inexpensive & plentiful energy. Windmills (& other "renewables") are both expensive & intermittent & are virtually a recipe for economic decline. If there were any truth to the catastrophic warming scare far & away the best way of cutting CO2 would be by nuclear power. That the "environmental"/Luddite lobby is overwhelmingly opposed to nuclear is clear & apparently indisputable evidence (at least they refuse to dispute it) that they themselves believe their catastrophe story is untrue.

21 - Encourage the production of an international HVDC grid. Putting up cables immediately to Norway, Iceland, Canada & Russia could be done faster than completing several new reactors & would prevent the probability of blackouts. Since all 4 of these countries have some of the world's cheapest electricity while we have some of the most expensive the advantages of being able to trade are obvious. In the longer term an international grid would have all the advantages & more* that the national grid had over the 1920s local production. *More being that, because demand is closely linked to daytime, off-peak electricity can be sold across time zones. Starting such a grid would not only help the British economy & put us at the centre of a major new trading market, but keep the rest of the world, or at least all countries that chose to participate, out of recession too.

22 - Hold a top level scientific conference, inviting real scientists, including Nobel winners, not administrators, to produce a definitive position on whether the no lower threshold (LNT) theory on radiation damage, or the competing one called hormesis, which says it is beneficial, is true. So long as it was a real scientific, evidence based, symposium I have no doubt that the LNT theory would be discredited since there is no actual evidence for it. The effect of this on discouraging anti-nuclear hysteria can hardly be underestimeated.

23 - Set up a British space base on Thule & use it to launch spacecraft allowing Britain to reach "Mars by 2015, Saturn by 2020" or earlier. This was originally costed at $1 billion in the 1960s & current costs, amortised over a decade, are easily affordable. The economic benefits of controlling the universe are considerable, if difficult to fully quantify immediately.

24 - Remove all specific controls over the exploitation of shale gas; publicly declare that all the evidence is that it is far safer than, for example, windmills; and that the government will use its national interest powers over planning to ensure any shale gas exploration and development will go ahead without interference. The technological brealthrough that has allowed us to reach deep buried shale gas is causing an energy revolution, Brtiain clearly has been gifted with enormous potential in this and we should ensure that no country in the world is a better place for the free market to develop this wealth.

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26 - Nationalise the science fiction and comic book shops and ensure that their wares are free at the point of delivery for all.
Got to say, can't see how 'making islands' and building a launch facility on Thule will even slightly help the economy. Also, It would cost far more to do most of these things than you have accounted for. You can't do most of these things overnight, and would not solve the economy any time soon; even if any of them were half decent ideas.
Got to say I can't see how putting 10,000 tons of equipment into orbit (more than all the current satellites put together) and creating sustainable oceanic agricultutral communities able to feed 10s of millions of people can't be easily seen as producing wealth.

The costs have been gone into in detail. If you have a specific disagreement on fact make it.

Other than that I am pleased that you could find nothing to disagree with on the other 22.
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